(Appendix 11A) Royal Products, Inc

question 12

Multiple Choice

(Appendix 11A) Royal Products, Inc., has a Connector Division that manufactures and sells a number of products, including a standard connector that could be used by another division in the company, the Transmission Division, in one of its products. Data concerning that connector appear below:
The Transmission Division is currently purchasing 6,000 of these connectors per year from an overseas supplier at a cost of $65 per connector.
-Assume that the Connector Division has enough idle capacity to handle all of the Transmission Division's needs.What should be the minimum acceptable transfer price for the connectors from the standpoint of the Connector Division?

• A) $21 per unit
• B) $56 per unit
• C) $69 per unit
• D) $65 per unit

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Definitions:

Interest Calculations

The process of determining the interest payment on a loan or financial product based on the principal, rate, and period.

Journalize

The act of recording transactions in a company's journal, which includes details like the date, accounts affected, and amounts involved.

Creditor

An entity (person or institution) to which money is owed.

Discounted Note

A financial instrument that is sold for less than its face value and matures at face value, resulting in a gain for the holder upon maturity.